Hyundai Motor Suffers KRW 700 Billion Loss in China, While Kia Achieves Profit Turnaround

[Korea Financial Times, Gwak Horyung] Kia Corporation has achieved a profit turnaround in China for the first time in eight years, contrasting sharply with Hyundai Motor Company, which has posted losses in its Chinese operations for six consecutive years. Kia's proactive strategy of transforming its Chinese factories into export hubs stands out.

Beijing Hyundai Motor Company (BHMC), Hyundai's joint venture in China, recorded a comprehensive loss of KRW -717.7 billion last year. Although this marks an improvement of approximately KRW 300 billion compared to the KRW -1 trillion loss in 2023, the company has been incurring significant losses for six consecutive years. Due to these ongoing losses, Hyundai ceased equity method accounting for BHMC last year and reduced its book value to zero. Back in 2016, when Hyundai achieved its highest sales in China, BHMC’s book value stood at KRW 2.2258 trillion.

In contrast, Kia’s joint venture in China, Jiangsu Yueda Kia Motors Co. (KCN), reported a comprehensive income of KRW 45.8 billion last year, breaking a seven-year streak of losses since 2017.

The challenges faced by both Hyundai and Kia in China's domestic market are similar. Over the past decade, declining sales have led to significant lineup reductions, resulting in diminished market presence. In 2024, Hyundai sold approximately 125,000 units and Kia sold 78,000 units in China, representing a year-on-year decline of 3% for both companies. Compared to their peak sales in 2016, these figures represent only one-sixth of their former volumes. Market share has also plummeted, with Hyundai at 0.6% and Kia at 0.3%, bringing their combined share below 1%.

The key factor differentiating the performance of Hyundai and Kia is exports. According to Kia's investor relations materials, the company exported 140,000 units from its Chinese factories last year—more than three times Hyundai's volume of 45,000 units. By Q3 of last year, Kia’s Chinese factory utilization rate exceeded 96%.

Kia began leveraging its Chinese factories as export bases two years earlier than Hyundai, starting in 2021. Its Yancheng plant in southeastern China strategically targets markets such as the Asia-Middle East (43%) and Latin America (30%). Although current sales volumes remain modest, Kia has also started exporting its EV5 electric vehicle model designed specifically for overseas markets from China. The company plans to increase exports from its Chinese plants to around 250,000 units this year.

Hyundai is also showing determination to turn around its Chinese business. In December last year, Beijing Automotive Group (BAIC) announced a joint investment with Hyundai totaling approximately KRW 1.6 trillion into BHMC. In January this year, Hyundai injected KRW 400 billion into BHMC as part of this plan. Additionally, Hyundai aims to develop range-extended electric vehicles (EREVs), which are gaining traction in China’s market for compact electric vehicles. Production is set to begin locally next year with an annual target of selling 30,000 units—a goal announced during Hyundai's CEO Investor Day last August.

Gwak Horyung (horr@fntimes.com)